What If You Buy Coca-Cola, Exxon-Mobil, and Johnson & Johnson Every Year?

For a thought experiment, I wanted to look at the results of what would happen if an investor went through life by adopting this strategy: during the first trading week of January each year, he bought $1,000 worth of Coca-Cola stock. During the first week of April, he bought $1,000 worth of Exxon stock. And during the first week of August, he bought $1,000 worth of Johnson & Johnson stock.

The logistics of this plan would be this: you’d need to come up with $3,000 every year, plus the negligible trading fees (probably around $25 or so each year). This works out to a little over $8 per day.

The rationale behind the plan would be this: you would spend your life accumulating shares of the most powerful beverage company in the world, the most powerful energy enterprise in the world, and the most powerful diversified healthcare giant in the world.

Here is what that ten-year plan would look:

The January 2003 purchase of $1,000 worth of Coca-Cola stock would be worth $2,389 today.

The January 2004 purchase of $1,000 worth of Coca-Cola stock would be worth $2,079 today.

The January 2005 purchase of $1,000 worth of Coca-Cola stock would be worth $2,466 today.

The January 2006 purchase of $1,000 worth of Coca-Cola stock would be worth $2,441 today.

The January 2007 purchase of $1,000 worth of Coca-Cola stock would be worth $1,998 today.

The January 2008 purchase of $1,000 worth of Coca-Cola stock would be worth $1,533 today.

The January 2009 purchase of $1,000 worth of Coca-Cola stock would be worth $2,003 today.

The January 2010 purchase of $1,000 worth of Coca-Cola stock would be worth $1,558 today.

The January 2011 purchase of $1,000 worth of Coca-Cola stock would be worth $1,349 today.

The January 2012 purchase of $1,000 worth of Coca-Cola stock would be worth $1,201 today.

The January 2013 purchase of $1,000 worth of Coca-Cola stock would be worth $1,081 today.

From 2003 to 2013, you would have purchased $11,000 worth of Coca-Cola stock. Today, that would be worth $20,098 dollars. You would have a little over 500 shares generating a little over $560 per year in dividend income.

Now let’s take a look at Exxon-Mobil:

The April 2003 purchase of $1,000 worth of Exxon-Mobil stock would be worth $3,241 today.

The April 2004 purchase of $1,000 worth of Exxon-Mobil stock would be worth $2,673 today.

The April 2005 purchase of $1,000 worth of Exxon-Mobil stock would be worth $1,832 today.

The April 2006 purchase of $1,000 worth of Exxon-Mobil stock would be worth $1,734 today.

The April 2007 purchase of $1,000 worth of Exxon-Mobil stock would be worth $1,378 today.

The April 2008 purchase of $1,000 worth of Exxon-Mobil stock would be worth $1,180 today.

The April 2009 purchase of $1,000 worth of Exxon-Mobil stock would be worth $1,449 today.

The April 2010 purchase of $1,000 worth of Exxon-Mobil stock would be worth $1,468 today.

The April 2011 purchase of $1,000 worth of Exxon-Mobil stock would be worth $1,129 today.

The April 2012 purchase of $1,000 worth of Exxon-Mobil stock would be worth $1,104 today.

The April 2013 purchase of $1,000 worth of Exxon-Mobil stock would be worth $1,027 today.

From 2003 to 2013, you would have picked up $11,000 worth of Exxon stock. Today, that would be worth $17,188. At $90 per share, you’d have 190 shares generating $478 in annual dividend income.

Now we’ll move on to Johnson & Johnson.

The August 2003 purchase of $1,000 worth of Johnson & Johnson stock would be worth $2,450 today.

The August 2004 purchase of $1,000 worth of Johnson & Johnson stock would be worth $2,183 today.

The August 2005 purchase of $1,000 worth of Johnson & Johnson stock would be worth $1,840 today.

The August 2006 purchase of $1,000 worth of Johnson & Johnson stock would be worth $1,842 today.

The August 2007 purchase of $1,000 worth of Johnson & Johnson stock would be worth $1,861 today.

The August 2008 purchase of $1,000 worth of Johnson & Johnson stock would be worth $1,603 today.

The August 2009 purchase of $1,000 worth of Johnson & Johnson stock would be worth $1,755 today.

The August 2010 purchase of $1,000 worth of Johnson & Johnson stock would be worth $1,736 today.

The August 2011 purchase of $1,000 worth of Johnson & Johnson stock would be worth $1,618 today.

The August 2012 purchase of $1,000 worth of Johnson & Johnson stock would be worth $1,396 today.

The August 2013 purchase of $1,000 worth of Johnson & Johnson stock would be worth $988 today.

From 2003 through 2013, you would have picked up $11,000 worth of Johnson & Johnson stock. Today, that would be worth $19,272. At $92 per share, that would give you 209 shares generating $551 in annual dividend income.

Combined, you would have turned $33,000 into $56,558. If that does not sound as impressive as the statistics I usually cite regarding these types of high-quality stocks, it is because the investment is gradual, rather than lump sum. If you made your $11,000 investment into Coca-Cola in January 2003, you would have $26,000+ instead of a little over $20,000. If you made your $11,000 investment into Johnson & Johnson all at once in August 2003, you would have just shy of $27,000 today instead of $19,200+. In the case of timing, April 2003 would have been quite fortuitous. You would have over $35,000 today instead of a little over $17,000. That’s what happens when you pay a value price for a high-quality oil stock right before prices shoot up.

What I like about these results is that they demonstrate you can build “real money” without: having a high salary, developing particularly clever business insights, or engaging in market timing. This is about as basic as you can make investing.

This exercise shows when you find a way to set aside $8.21 per day, put it into a no-brainer excellent company, and exercise absolutely no intelligence or value-investing character traits. In short, you turned a little over $8 per day into a little over $56,000 in this scenario in a decade time frame. Imagine what the results would be if you did buy these companies at a value price, gave them more time, or were in a position to buy larger blocks of stock in these excellent companies. The point is this: (1) Waiting for everything to be perfect can make you miss out on perfectly satisfactory opportunities, and (2) you’re never too poor to invest*. This scheme only assumes setting aside $8 per day.

*=however, there may be times when it is unwise, given your personal opportunity costs, to invest. If you’re carrying debt at 14%, paying that sucker down is going to get you a lot further than trying to buy $500 worth of Coca-Cola stock or whatever it may be.

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